Board of Directors’ proposal to AGMThe Board proposes a dividend of SEK 2.00 per share for the 2016 fiscal year and also proposes that the Annual General Meeting resolve to authorize the buy back and transfer of the company’s own Class B shares. In addition, the Board proposes the cancelation of the treasury shares.

CEO’s comments

Revenues more than doubled in 2016

Following an eventful 2016, we have also got off to an eventful start to 2017. I am delighted that I was able earlier in the week to communicate our strategic acquisition of Delta ID – an acquisition that I view as a key step in our business development. Delta ID’s world-leading technology for iris recognition complements our current biometric technology platform for fingerprint sensors and strengthens our offering. Building up credibility is important for us and during 2016, and in early 2017, events beyond our control have impaired confidence in the company. Naturally, we take a very serious view of these events and we will continue to cooperate fully with the relevant authorities and hope for a rapid outcome of these processes. However, my primary task is to maintain my focus on the business, on our skilled employees and on our customers, because it is by developing the business and strengthening the brand that we build our credibility among all of our stakeholders.

Fourth quarterIn the fourth quarter, revenues rose to SEK 1,619 M, equal to year-on-year growth of 20 percent. Operating profit during the quarter was SEK 548 M, corresponding to an operating margin of 34 percent. Our gross margin remains healthy at 44 percent which demonstrates that we are faring well in a growing market subject to intense competition. Cash flow from operating activities was SEK 186 M. During the quarter, our OEM customers launched 32 mobile devices equipped with integrated sensors from Fingerprint Cards AB (“Fingerprints”). One of these represented the unveiling of our new sensor for use under glass, the FPC1268. Moreover, Samsung launched its new Notebook 9 series featuring one of our sensors and, at the Money 2020 trade fair, a number of our partners demonstrated prototypes of smartcards fitted with our new ultra-thin sensors from the FPC1300 series. On the whole, this was a quarter hallmarked by several positive events, such as growth, healthy profitability and several signs that our innovative products are gaining ground in both existing and new areas. While we are naturally feeling the sharpening competition, we are well equipped to cope with it. Due to earlier inventory build-up in the supply chain, a component shortage affecting a number of our customers and the intensifying competition, we were forced late in the quarter to adjust the full-year revenue guidance. As previously announced, these factors will also impact us in the first quarter of 2017, when revenues are expected to be materially weaker than in the first quarter of 2016. The revenue guidance for full-year 2017 remains as previously communicated: revenues of between SEK 7,500 M and SEK 9,500 M, and an operating margin exceeding 35 percent.

Full-year 2016Revenues for 2016 totaled SEK 6,638 M, up a full 129 percent. All financial key figures improved; the operating margin rose to 39 percent, the gross margin to 48 percent and cash flow from operating activities to SEK 1,130 M. We have grown to more than 400 employees and now have offices in the world’s most innovative areas. During the year, our OEM-customers have launched almost 140 mobile devices containing our sensors. Our product portfolio has been broadened and differentiated and we offer products for smartphones and smartcards, as well as for PCs and embedded systems. The increasing competition is a spur to us and we are now upping the pace to ensure our continued leadership in a growing but tough market.

StrategyWhen I now look to the future, I can state that we are world leading in fingerprint sensors for mobile units, such as smartphones and tablets, with a market share for 2016 that we currently estimate at between 55 and 60 percent. This market segment represents a continued growth opportunity and, in addition, approximately 10 billion other products are produced each year – such as smartcards and door locks – which could all be made more secure and easier to use if fitted with a biometric solution. There is large potential for us in these new market segments and I am convinced that we are currently only at the very infancy of the biometric era, in which we are now and intend to continue to be the driving force and the leading biometric company.

Our strategy has been shaped to be able to leverage these new opportunities, and it includes a combination of market and technological development. Our new organization reflects our determination to grow in the new market segments. At the same time, we have a leading and concentrated R&D organization to facilitate the further development of our existing capacitive technology, and to develop and integrate complementary technology in order to create new innovative solutions. Thanks to our systems know-how, our innovativeness and our strong financial position, we have the potential to achieve this independently and through complementary investments in technology or company acquisitions.

This is an exciting time for biometrics and I am highly enthusiastic ahead of 2017 and our opportunities to further develop our leadership to include new market segments and new technologies.